Provinces seek federal govt nod to mobilise foreign aid

Kathmandu December 6

Chief ministers of seven provinces are planning to call on the federal government to allow provinces to mobilise foreign aid, revise revenue sharing mechanism, formulate umbrella laws at the earliest and establish an effective secretariat at the centre to coordinate with provinces. Provincial chief ministers are mulling over raising these issues during the Inter-provincial Council meeting scheduled to be held in Kathmandu on Sunday.

The meeting was originally planned for the second week of September, but Prime Minister KP Sharma Oli, who heads the council, cancelled it after the chief ministers met in Pokhara and set a nine-point agenda for the council meeting. The PM saw this move as an attempt to exert undue pressure on the central government, as he had asked chief ministers to attend the meeting without any agenda. The provincial chief ministers are planning to table the nine-point agenda set earlier in the Sunday meeting.

“The nine-point agenda that we have prepared will clear up most of the ambiguities on roles and responsibilities of the federal as well as provincial governments,” Chief Minister of Gandak Province Prithivi Subba Gurung told THT.

One of the issues that provincial chief ministers are planning to raise during the meeting is related to foreign aid. “We want the central government to simplify the process of mobilising foreign aid,” said Gurung.

The Inter-governmental Fiscal Arrangement Act states that provincial and local governments shall not obtain foreign grant or assistance or implement any plan or programme using foreign grant or assistance, without prior consent of the federal government. “This provision is not practical and is preventing provinces from meeting its development aspirations,” Gurung said, adding, “We should have the right to talk to donors about foreign loans and grants.”

Many provincial governments are also unhappy over the revenue sharing mechanism developed by the federal government. They are entitled to 15 per cent of value added tax and 15 per cent of excise duty levied on domestic products. They are also entitled to 25 per cent of royalties generated from the use of natural resources, namely mountaineering, electricity, forests and mines and minerals.

“We want upward revision to these thresholds so that we can have more resources to meet development needs,” Gurung said, without elaborating.

Provincial governments are also seeking early establishment of provincial public service commissions, so that they can hire staff on their own based on need. They are also demanding that they be allowed to build their own police force, as per the constitutional provision. Other demands include permission to establish offices scrapped by the central government, handover of provincial projects that are under the central government and formulation of umbrella laws to streamline functioning of provincial governments. “We have been asking the central government to look into these issues for a long time,” said Gurung. “But it has not bothered. That’s why we want the central government to establish a strong secretariat that can respond to our calls promptly.”

The meeting will be attended by federal home and finance ministers and chief ministers of all seven provinces.